Commentary

Shopping In Mind

As Columbus Day weekend comes to a close, I can't help but think about consumer confidence. It seemed like no matter where I looked, from supermarkets to strip malls to traffic going up north for leaf-peeping, people were out and about. It looked like they were spending money, too.

The latest Future Spending Index from consultants Retail Forward Inc. just came out, predicting that shoppers will increase their spending in October. The Future Spending Index stands at 99.1 in October, up from 92.7 in September. There are some critical factors that seem to be boosting consumer confidence: gas prices finally dropping, the stock market hitting new records and job openings. Hopefully this will spawn holiday shopping. Retail Forward Reports:

  • The Future Spending Index for Up Market households (those with incomes of $75,000+) rose to 94.5 in October from 89.3 in September. Assessments of job security increased to their highest level since the first quarter. Reports of investment worth also jumped. Refinancing activity in this income segment increased, as mortgage rates have fallen.

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  • Middle Market households (incomes of $22,500 to $74,999) also are more upbeat about the outlook, and for the same reasons as Up Market households. The Middle Market index improved to 100.7 this month from 96.0 in the prior month.

  • Results for Down Market households (incomes of less than $22,500) parallel the other two income groups. The Down Market index increased to 106.6 compared with 92.0 in September. For holiday shopping, 12 percent of Up Market consumers plan to increase their spending somewhat more or much more, as do 13 percent of Middle Market and 12 percent of Down Market shoppers.

    So what's up with online shopping, you ask? Well 52 percent of consumers plan to shop online. These consumers plan to spend about the same as they did last holiday season. Up Market consumers are predicted to spend 20 percent more online, while Down Market consumers say they don't shop online.

    A holiday shopping forecast by The Performics 50 states that fourth quarter 2006 online sales will eclipse those of last year by 53 percent. This will be about equal to the total sales of both Q1 and Q2 2006, combined. The company also noted that competition for higher-priced, more popular keywords in sponsored search engine advertising has increased significantly.

    The consumer mindset is certainly changing with other lifestyle factors. Kids have been back to school for a while now. We'll change the clocks back soon, and Thanksgiving will also be here before we know it. I anticipate retailers' ads to be distributed and/or leaked shortly for Black Friday, the day after Thanksgiving, said to be the most popular shopping day of the year. Check out http://bfads.net/ periodically and see.

    If you haven't geared up for Q4 online, what are you waiting for? In a recent CNN Money interview, Frank Badillo, senior economist with market research and consulting firm Retail Forward, said, "Online retailing is the fastest-growing retail segment. This segment will represent more than 3 percent of total retail sales for the first time ever this year."

    How do you think the holiday season will affect Web usage? For those of you who represent non-retail consumer brands, do you plan to shift your strategy as a result? Post to the Spin blog and let us know.

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